Temu and Shein and other foreign clothes retailers will have to apply a 45 percent VAT mark-up on imports valued at less than R500. These changes will apply from 1st July this year. This comes after local fashion brands and clothes retailers approached SARS and government with concerns.
As of 1st July 2024, local imports from Chinese ecommerce giants like Shein and Temu will be taxed the same as clothes purchased from South African retailers. These measures stem from the government and were drafted after retailer bodies including The Foschini Group appealed to the South African Revenue Services (SARS) and Customs to do more to level the playing field between local companies and the Chinese fast-fashion and uber-cheap marketplace giants. As per a Sunday Times report, packages valued under R500 from Shein and Temu being imported locally will receive a 45 percent value added tax (VAT) mark-up as of next month.
This is the same rate that local clothing retailers have to pay, the lobbyists say. This is an enormous price mark-up for both companies which are known for their cheap products. Local retailers have long accused both firms of exploiting numerous smaller imports to dodge certain tax regulations and balloon profits.
Now, customers will have to face hefty price increases on items if the total value of the package being sent is lower than R500. For example, a R300 package would become R435 after the new VAT is included next month. This may lead to more customers shifting to b.